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Investing.com - BMO Capital lowered its price target on Tronox (NYSE:TROX) to $1.00 from $3.00 on Thursday, while maintaining an Underperform rating on the stock. The stock, currently trading at $5.14, has fallen over 66% in the past year, with analyst targets ranging from $3 to $9.
The firm cited weak conditions in the coatings market and intense competitive pressure from both Western and Chinese producers, which resulted in a significant drop in Tronox’s volumes.
BMO Capital noted that these volume declines, combined with high cost inventory and fixed cost absorption, drove the company’s EBITDA down 43% year-over-year, falling well below expectations.
With these pressures expected to continue and Tronox facing high leverage, management is being forced to operate assets for free cash flow and working capital generation rather than EBITDA, resulting in a significant reduction to the company’s 2025 guidance.
The situation has also prompted Tronox’s Board to cut the dividend by 60%, according to BMO Capital’s analysis of the company’s current financial position.
In other recent news, Tronox Holdings PLC reported disappointing financial results for the first quarter of 2025. The company missed its earnings per share (EPS) forecast, posting an actual EPS of -$0.15 compared to the expected $0.02. Revenue also fell short of expectations, coming in at $738 million against the anticipated $751.59 million. Additionally, BMO Capital Markets downgraded Tronox’s stock rating from Market Perform to Underperform, citing demand challenges across various regions, including weak U.S. housing and soft construction markets in China. The firm also slashed the stock’s price target to $3.00 from $7.00. On a more optimistic note, JPMorgan upgraded Tronox from Neutral to Overweight, raising the price target to $7.00, based on a favorable outlook for titanium dioxide (TiO2) prices in the coming years. Meanwhile, Mizuho (NYSE:MFG) adjusted its price target for Tronox to $6.00, maintaining a Neutral rating due to a weak TiO2 market outlook. These developments reflect a mixed sentiment among analysts regarding Tronox’s future prospects.
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